2016 is the Year of the Pegasus
2015 was the year of “The Unicorn” in startup-land. If you’re lucky enough to be reading this and thinking of a mystical four-legged creature with a cone attached to it’s head—instead of a tech company—congratulations: you don’t live in Silicon Valley, pay exorbitant rent, or shell out $4 for a coffee that will take ten minutes to make.
For some background, “Unicorns” are defined as companies that are privately held and have a valuation of over a billion dollars. As of today there are 145 companies hitting this mark with a cumulative value of $516B; the term “unicorn” came into use with regards to how rare these companies were perceived to be, but ballooning valuations have given birth to a herd of unicorns in the Bay Area alone. This year it was hard to open a browser without seeing articles marvelling over the hyper-growth of such companies as Uber ($51B), Airbnb ($25.5B), and Snapchat ($16B).
When this “hit it out of the ballpark” moment happens, at least on paper (remember only a handful of these Unicorns have IPO’ed or sold yet), entrepreneurs get excited. It’s similar to seeing an unknown actress rise the ranks and become an A-list celebrity if you live in LA and aspire to acting in box office hits — it gives the rest of us hope and something to point to “see they did it, why can’t we?”.
The problem is, 9 out of 10 startups fail, and out of the 10% that do succeed an even slimmer margin go on to be valued at a billion dollars or more. Even worse, some climb to the ranks of Unicorns, but then fall from grace and hurt both investors and employees as recently happened with Good Technology.
So you don’t want to chase a Unicorn…
This article isn’t for those who want to become a Unicorn; it’s for the rest of us. Those of us who are burnt out of the chase (yours truly included). Those who are just entering the entrepreneurship game but wary of the “Silicon Valley” ironically–but often accurately–portrayed on HBO. There is an alternative in the world of fairytale-horsey-paradigms that we seem to so love… Meet the Pegasus: a new startup archetype.
A “Pegasus” startup is a business defined by freedom for the entrepreneur; my use of the term is meant to refer to both how unique and freeing this type of company can be, just as the mythical pegasus could spread its wings and take to the sky whenever it tickled it’s horse-fancy. These “Pegasus” startups are architected from inception to work in tandem with the life the entrepreneur wants to lead. Versus a Unicorn which is born from years (if not decades) of 70+ hour weeks and sacrifices ranging from personal relationships to good health.
One of my favorite blog posts of 2015 was by Basecamp’s co-founder titled “Reconsider”.
In my mind Basecamp is a quintessential Pegasus, it has created wealth and freedom for its’ founders while producing a product people use and love. When talking about the company he founded 12 years ago, that is still a top selling productivity tool and has spawned two best selling books, he says:
[Basecamp] didn’t disrupt anything. It didn’t add any new members to the three-comma club. It was never a unicorn. Even worse: There are still, after all these years, less than fifty people working at Basecamp. We don’t even have a San Francisco satellite office!
The great thing about the Pegasus startup is that you, as the entrepreneur, define it. You create the world in which you want to live. As the business grows it will attract others who desire the lifestyle your Pegasus provides — whether it’s the chance to live and work on Hermosa beach, or the ability to raise one’s family while working remotely.
Do as I say, not as I did…
I chased the Unicorn myself for years. As a first time CEO in San Francisco it was hard not to get pulled in by constant headlines and hearing the same question whenever we talked to investors: “this is great, but how will you get to a billion dollars?”
Without realizing it, our company Zirtual (which was born from a lifestyle business started in Reno because I wanted to escape the 9-to-5) joined the ranks of hopeful Silicon Valley startups chasing the B-word (the one that comes with three commas, just for clarity). During that chase, and partially because of it, Zirtual went splat.
Not only did this negatively affect 450 people whom we employed at the time and become one of the lowest points of my life and, but I often wonder how things would have been different if we had chased a different goal… the original goal: to grow a sustainable company from scratch by being scrappy.
Creating a Pegasus Startup from Scratch
Unicorns, and the war stories of those who made them, can be sexy and alluring while their valuations include three commas. They are media darlings, they speak at tech conferences, and everyone wants a piece… but there are many more who litter the path, and often the sacrifices required outweigh the one in thousands chance at that level of growth.
This year I am planning on starting my own Pegasus, and I want to invite you to join me. One of the benefits of failure is you get to see both what doesn’t work and what would have. I’m excited to take these lessons into my next business — which will be in a space that is radically different than anything I’ve ever done before.
Join me on this journey and learn about, or build your own, company with freedom at it’s core. I’ll be publishing 10 posts that outline step-by-step how to build a Pegasus—stay tuned to Escapingthe9to5.com and sign up for the RSS or newsletter to get updates!